United States: Goldman Joins Banks Exploring Green Equity as New ESG Asset

The head of sustainable finance at Goldman Sachs Group Inc. says the Wall Street firm is now experimenting with green equity, adding its weight to a new category of climate-friendly assets.

“We are seeing movement, just in terms of actual labelled product,” John Goldstein, who runs Goldman’s sustainable finance group, said in an interview. “When and where and how would we get to actual green equity, I think we’ll see.”

Thirteen years after the world got its first green bond, some corners of the financial industry are now working on creating a market for green stocks that meet measurable climate metrics. The new asset class would give investors chasing environmental, social and governance goals a new place to put their money, and potentially direct some capital flows away from debt markets.

Goldman recently worked on a private equity placement that involved getting a window manufacturer the necessary designation to issue green shares, which “was an important step in that direction,” Goldstein said.

“I think it’s an open question of how this is going to emerge, but I think that is why that made a really good early case,” he said.

Green equity appears to have made its debut in Sweden, where one of the country’s biggest banks says it was the first to shepherd a deal to market. Adapting procedures for green bond issuance to accommodate share sales, Swedbank AB has now done three such deals. Its chief executive, Jens Henriksson, says the bank moved ahead on its own in the absence of global standards.

“You need to take steps forward,” Henriksson said. “We think it was a good solution and we think it worked well. But of course, it will have its weaknesses and competition will bring out the strongest here.”Other Banks in the Nordic region — where a much larger chunk of total bond issuance is green than in the rest of western Europe or the U.S. — are also working on designing green equity programs.

SEB AB, the Swedish bank that helped usher in the first-ever green bond back in 2008, is “quite” far into talks to develop a framework, according to Christopher Flensborg, head of the climate and sustainable finance at the Stockholm-based lender.

The original full article can be found at bloomberg.com

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